Canyon Midstream plans new system in Ector, Andrews counties

Mella McEwen

Published 5:11 am, Friday, January 17, 2014

By Mella McEwen

mmcewen@mrt.com

Continued increases in Permian Basin oil and natural gas production have producers seeking ways to move their commodity to market. This has given rise to expanded midstream infrastructure throughout the region.

Joining that expansion is Canyon Midstream Partners of Houston, which has announced plans for the James Lake System, a natural gas gathering, processing and treating system anchored by a 10-year gathering and processing agreement with one of the world's largest oil and gas companies.

The system will include a cryogenic gas processing plant, with an initial processing capacity of 70 million cubic feet per day and treating capabilities for natural gas containing hydrogen sulfide and carbon dioxide, in Ector County. Canyon is also developing 40 miles of high pressure gathering trunklines and three compressor stations, which will connect to low pressure field gathering systems that Canyon is constructing for its anchor customer in Ector and Andrews counties. Completion is set for the end of this year or the first of next year and when completed will deliver residue gas into the El Paso Natural Gas pipeline and offer interconnections to multiple NGL lines in Ector County.

Michael Walsh, Canyon president, said it is the company's first Permian Basin project.

"We had a number of discussions with producers looking for additional midstream services and we had the opportunity to participate," he said. The company is also in talks with other producers that could result in expansion of the system.

"There is a lot of existing infrastructure there serving the long history of production in the Permian Basin," he said. "Production is growing at such a fast pace it's inviting additional midstream construction and creating opportunities for new companies like ourselves."

Canyon, Walsh said, has opened an office in Odessa and acquired the site in Ector County for the processing plant. He said the permitting process is being completed and the company is lining up contractors and equipment to begin construction. State agencies, he said, especially the Railroad Commission, have been working well with Canyon on the process.

He added that the company is looking at future projects elsewhere in the Permian Basin.

Canyon was formed to acquire, develop and operate midstream energy companies and assets. Its founders are former senior management of Delphi Midstream Partners LLC and Laser Northeast Gathering Company LLC. Walsh serves as president and chief executive officer, Mark Fuqua as senior vice president, business development and Dale Harper as senior vice president, engineering and operations. The company is backed by $300 million equity commitments from Kayne Anderson Energy Funds, company management and other institutional investors.

It has assets in the Permian Basin, East Texas and the Tuscaloosa Marine Shale.